Tranz Rail expected to announce services sale

By DANIEL RIORDAN and NZPA

Tranz Rail is expected to reveal today that it is selling its Tranz Scenic long-distance passenger services to Melbourne-based West Coast Railway.

West Coast chief executive Don Gibson, who has been travelling to Auckland frequently for several weeks to meet Tranz Rail officials, said a statement would be released today, but would not elaborate on what it would say. Tranz Rail also declined to comment.

Privately-owned West Coast Railway runs a thrice-daily passenger service over the 267km between Melbourne and Warrnambool.

Connex, part of the French-owned Vivendi group, was reported last week to be backing West Coast's purchase of Tranz Scenic services, but Mr Gibson said it was "not correct yet" to suggest it was bankrolling the deal.

"Connex's position in any of this is not a public position at this stage."

The French company operates in Australia, Britain, Norway, Germany, Poland, Belgium, Portugal and the Philippines. It carries more than a billion passengers a year worldwide and employs more than 35,000 people.

Speculation that Tranz Scenic services would be cut after the sale was rife last week. Threatened were the Southerner between Christchurch and Invercargill, the Wellington-Napier Bay Express, the Auckland-Tauranga Kaimai Express and the Auckland-Geyserland run.

Services to continue would be the Tranz Coastal between Picton and Christchurch, the Tranz Alpine from Christchurch to the West Coast and the daily Northerner and Overlander services between Wellington and Auckland.

The Tranz Scenic network carries 465,000 passengers a year.

Analysts expect the sale to fetch between $20 million and $30 million, the final price depending on the deal's structure, including tax issues and the cost of leasing tracks from Tranz Rail.

Tranz Rail shortlisted three parties for the sale, which is part of extensive restructuring.

Another of the shortlisted candidates is believed to be Canada's Rocky Mountaineer Railtours, one of the largest privately-owned passenger rail services in North America.